A Shareholder Agreement is a private agreement between shareholders, regulating the relationship between the shareholders and how the company is governed. This can impact how certain key decisions will be made in a variety of scenarios.
It is always necessary to consider the Shareholder Agreement as a whole to ensure it strikes a balance between being fair to shareholders without reducing the value of a shareholding or having a detrimental effect on the trading of the company.
Our shareholder agreement solicitors will discuss the areas of importance for your company and supply you with a checklist identifying those topics which shareholders should discuss and agree on at the time of forming a business.
Contact Sanjay Soni s.soni@thpsolicitors.co.uk or Malcom Head m.head@thpsolicitors.co.uk or call 01491 570 909 to see how we can help with your business needs.
The majority of Shareholders’ Agreements will hopefully spend most of their life in a filing cabinet after drafting. However, they should not be overlooked as key commercial documents for anyone setting up or investing in a limited company. Their clear and concise terms and processes can give much-needed protection and transparency to shareholders if a dispute arises or an unexpected event such as divorce or death occurs, and the issue of what happens to shares arises.
Without Shareholder Agreements, shareholders may find themselves embroiled in costly litigation or grind to a halt altogether, being bound by rules and regulations determined by the Company’s Articles of Association – which may not be appropriate to the specific relationship between the shareholders or their specific intentions.
The death of a shareholder can cause a great deal of disruption and uncertainty in a company and without a Shareholder Agreement in place, the transfer of a deceased shareholder’s shares may be lengthy and complicated to achieve.
Shareholders’ Agreements can include a several specific and bespoke provisions in relation to a deceased shareholders’ shares, which enable existing shareholders to determine the movement of shares in specific circumstances, notwithstanding the general rules laid down by the Articles of Association.
It is not uncommon for company shares to be a point of dispute between spouses during the divorce process. A Shareholders Agreement can include provisions to deal with such instances and life events.
A Shareholders’ Agreement can include various options for shareholders if another shareholder wishes to sell their shares or. if they wish to leave the company.
Shareholders’ Agreements can be used to protect minority, majority and equal shareholders alike.
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